The most popular alternative to NPV for capital budgeting decisions is the ________ method.
A)internal rate of return (IRR)
B)payback period
C)discounted payback period
D)profitability index

Question

Quizplus · Accepted Answer

While payback period, discounted payback period, and profitability index are all commonly used in capital budgeting decisions, the internal rate of return (IRR) is widely considered the most popular alternative to NPV. IRR measures the rate at which the project's cash flows equal the initial investment and provides a percentage return on investment. It is often used as a supplement to NPV to provide additional insights into the potential return on investment.

The Most Popular Alternative to NPV for Capital Budgeting Decisions